The Democratic Dilemma of Monetary Union

Transcription

1 The Democratic Dilemma of Monetary Union Ben Crum EUDO Dissemination Conference The Euro Crisis and the State of European Democracy European University Institute, Florence 22 and 23 November 2012

2 How does the financial crisis affect the relation between monetary integration and EU democracy? Nation state autonomy and diversity as the key mediating variable The value (legitimacy) of nation state diversity in the E(M)U: Normative reasons: proximity, responsiveness, accountability, experimentation. Economic diversity: economic structure, growth, GDP, business cycle, trade balance etc. - with few signs of convergence Political diversity: socio-economic models, political preferences Democracy: Effectively embedded at the national level At the international level, democratic institutions lack preconditions of constitutional stability, an integrated public sphere and effective political contestation

3 The shifting balance between monetary union and economic policy diversity Initially: Monetary integration with considerable economic policy diversity An exclusive supranational competence in exchange rate and interest policy Increasing transnational economic interdependence SGP leaves much national discretion With national responsibility: No bail-out Sovereign debt crisis in Euroland Lost national options of depreciation and printing money Increased interdependence and cascading threat Solution: loan packages on the basis of policy contracts Mutual distrust + lost political autonomy for debtors

4 Rodrik s Rodrik spolitical Trilemma Trilemmaof of the the World World Economy Economy [ Pick [ Pick two, two, any any two two (and (and no no more more than than two)] two)] Hyperglobalization Executive Golden Federalism Straitjacket Global Governance Nation state Euro Dissolution Bretton Woods Compromise Democratic politics

5 The Political Trilemma of the Eurozone [ Pick two, any two (and no more than two)] Monetary Union Executive Federalism Democratic Federalism Nation state Euro Dissolution Democratic politics

6 Executive Federalism Increased central policy coordination (by way of contracts) t Under national governments control: No effective parliamentary scrutiny International ti power politics outside of procedural constraints Depoliticization: delegation and fetishism of indicators

7 Democratic Federalism EU Economic government With democratic accountability (direct election or by EP) Fiscal Union Mutualization of national debts (Eurobonds) Increase EU(rozone) budget and transnational redistribution Core Europe +F Forced withdrawals But Will the member states allow this? Risk of democratic facade: institutions without engagement

8 Euro Dissolution Several member states might have been better off without EMU However, the way out is bound to be very costly: For the state involved For the other EU states For the global financial system ( Lehmann effect ) And very risky (unmanageable) Potential cascading effects Political fall-out/destabilization

9 Conclusion The axiological order: democracy national diversity - monetary integration The practical order: monetary integration - national diversity - democracy The EU s squeeze (platform/equilibrium): i Extensive supranational pooling of competences (that cannot and should not be rolled back) P i i i l d id ifi i Persisting national autonomy and identification What do these conditions leave of EU democracy? The duty to protect and mutually ensure national democratic functions Making political choices and responsibilities visible at the EU level Coordination between EP and national parliaments